Books of Accounts – What are Books of Accounts?

Books of Accounts are records of day to day business transactions that indicate their results of operations as stipulated by the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) regulatory guidelines.

An account can also be described as a record in the general ledger used while sorting or storing financial transactions.

The Main Types of Books of Accounts

Books of accounts are categorized by recognizing, defining and determining the relationships of the existing major types of accounting records. Transactions are normally based on the double-entry concept and its elements.

On this basis, books of accounts can be categorized as those used in the process of summarizing and analyzing transactions, which are also called books of original or prime entry. The other category of books of accounts is the General ledger.

The books of prime or original entry among many others include the following:

Day Books

These books of accounts exist as either purchases or sales day books. These books are used to record financial transactions that are realized on a credit transaction basis.

While the purchases day book/register records credit purchases, the Sales day book records all the credit sales.

The Day books make it easier and less time consuming by enabling the recording and analysis of these transactions before transferring the same to ledgers either directly or through the relevant journals.

They are mainly applicable in organizations that register numerous sales transactions.

Cash Book

This book of account records both credit and debit transactions undertaken in an organization on a cash basis. Here, the transactions are chronologically recorded and analyzed.

The totals from a cash book are transferred to the ledger either directly or through a journal. It is also important to note that a cash book can act as a substitute for a cash account in the ledger.


In the accounting process, a journal can act as a book of original/prime entry and/or a book of secondary entry. Apart from using a journal to chronologically record transactions, it is also used to identify and arrange or bundle transactions of a similar nature together.

A journal also shows whether a transaction should be posted to the relevant ledger on the credit or debit side. A journal is of great importance in business operations because every financial transaction in a company must always pass through it.

The general ledger, on the other hand, is divided into two as follows:

Personal Ledger

A personal ledger is composed of the Purchase and Sales Ledgers. It is a component of the general ledger that records transactions relating to customer and supplier accounts.

Impersonal Ledger

An impersonal Ledger is composed of Real, Nominal and Private Ledgers apart from the financial statements ranging from the Statement of financial position, Income statement, and the statement of cash flows. The nominal and real components of the impersonal ledgers handle accounts that directly relate to individuals.

These include fixed assets, stock, services, and wages accounts. Private ledgers, on the other hand, handle accounts that relate to management and ownership of organizations or businesses. Accounts in a ledger take the T-account format with a name and index at the top of the page. These accounts are regularly balanced.

Books of accounts, their structure and contents are very important in the accounting process. Despite the complexity that may exist in understanding these crucial accounting concept, it is still necessary in order to be better at producing financial reports that can be trusted for being complete and accurate.

Such reports enhance accountability, reliability and transparency as vital elements of any financial report. Therefore, one can seek answers to accounting homework from reliable experts in order to adequately and comprehensively understand the accounting books.